ASSOCIATION OF RELIEF VOLUNTREERS,,VIJAYAWADA vs. THE INCOME TAX OFFICER(EXEMPTIONS), RAJAMAHENDRAVARAM

PER Sri S. BALAKRISHNAN, Accountant Member :

This appeal filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals), Vijayawada [the Ld. CIT(A)] in appeal No.10231/CIT(A)/VJA/2018-19, DIN: ITBA/APL/M/250/2019-20/1025816007(1), dated 27/02/2019 arising out of the order passed U/s. 154 of the Income Tax Act, 1961 [the Act] dated 21/12/2018.

Ld. CIT(A) has mentioned the order date as 27/02/2019 instead

of 27/02/2020. The Learned Authorized Representative [the Ld.

AR] submitted that the request was placed before the Ld. CIT(A)

to issue a corrigendum for change of date of order from

27/2/2019 to 27/2/2020. The Ld. AR also submitted that as per

the dates of hearing in the CIT(A) order, the last date of hearing

was completed on 18/2/2020 and hence order cannot be dated as

27/2/2019. The Ld. AR further submitted that the assessee was

awaiting response w.r.t corrigendum, and as no response

received from Ld.CIT(A), the assessee submitted the appeal before

the Tribunal was filed on 22/10/2020. The Ld. AR further

submitted that the delay of and is covered by the order of the

Hon’ble Supreme Court being the relevant period covered by

COVID Pandemic Situation. The Hon’ble Supreme Court in

SMW(A) No.3 of 2020, dt: 23rd March, 2020 directed that the

period of limitation for filing the appeals under general laws and

all special laws falling between 15/3/2020 and 28/02/2022 shall

be excluded for calculating the delay. We also find that the date

of order mentioned in the order of Ld.CIT(A), is erroneous and it

cannot be 27.02.2019, as the last date of hearing is 18.02.2020.

3 Considering the same, we hereby condone the delay of 533 days

in filing the present appeal before the Tribunal and proceed to

adjudicate the case on merits.

organization registered U/s. 12A of the Act filed its return of

income for the AY 2016-17 admitting total income of Rs. NIL after

claiming exemption u/s. 11 of the Act. The return was summarily

processed and subsequently the case was selected for complete

scrutiny under CASS and statutory notices U/s. 143(2) and

142(1) of the Act were issued and duly served on the assessee.

The assessee however opted for e-proceedings and submitted the

information electronically. The Ld. AO after examining the

submissions, framed the assessment by making an addition of

Rs. 19,25,733/- stating that the assessee has not filed Form-10

within the stipulated time as prescribed U/s. 11(2) of the Act.

The Ld. AO further noted that the assessee has incurred an

amount of Rs. 22,07,314/- and has reported in ITR-7 in the

column “capital account”. However, on verification of the

records, the AO found that Rs. 22,07,314/- is shown under the

headings “sundry debtors”. The Ld. AO therefore rejected the

claim of the assessee and disallowed a sum of Rs. 19,25,733/-.

4 The Ld. AO further noted that even though the assessee has

shown gross receipts of Rs. 4,06,56,090/-, the gross receipts

collected amounted to Rs. 3,92,90,568/- as per the income and

expenditure account. Accordingly, the Ld. AO calculated the

application of income for charitable purposes at Rs.3,14,71,249/-

and disallowed the balance 15% amounting to Rs.19,25,733/- as

the assessee has filed Form-10 belatedly on 28/1/2017 for Rs.

8,79,113/-. However, while uploading the assessment order, the

Ld. AO erroneously uploaded the total income at Rs. NIL and

subsequently revised vide the order U/s. 154 r.w.s 143(3) on

21/12/2018 determining the total income of Rs. 19,25,733.

Aggrieved by the order of the Ld. AO, the assessee filed an appeal

before the Ld. CIT(A). During the first appellate proceedings, the

assessee’s representative filed a written submission stating that

the appellant has spent Rs. 22,07,314/- as repayment of loan

vide its letter dated 11/7/2019. Subsequently, the assessee filed

a revised letter on 14/10/2019 claiming that Rs. 22,07,814/-

was mistakenly submitted as repayment of earlier loans but it

represents the payment made in advance to suppliers of building

materials and others. The assessee’s representative submitted

copies of the bills and ledger accounts before the Ld. CIT(A). The

Ld. CIT(A) admitted the additional evidence under Rule 46A and

forwarded the same to the Ld. AO vide letter dated 15/10/2019

calling for a remand report. The Ld. AO submitted his remand

report on 3/12/2019 stating that the admission of the additional

evidence may not be entertained. The copy of the remand report

was forwarded to the assessee on 10/2/2020 to furnish the

rejoinder, if any. In response the assessee filed rejoinder vide

letter dated 18/2/2020 to the Ld. CIT(A). After considering the

additional evidences, remand report and the rejoinder to the

remand report, the Ld. CIT(A) relying on the decision of the

Hon’ble Madras High Court in the case of CIT vs. Thanthi Trust

reported in [1982] 137 ITR 735 dismissed the appeal of the

assessee. Aggrieved by the order of the Ld. CIT(A), the assessee

is in appeal before us.

“1. The order of the Ld. CIT(A) is erroneous both on facts and in law.

6 4. Any other ground that may be urged at the time of hearing.”

of the invoices which have been received during the assessment

year 2017-18 for the advances paid during the AY 2016-17 has

been placed before the Bench in the paper book page nos. 18 to

provided various advances for which the bills are received in the

subsequent year and hence they should be treated as amounts

spent for charitable purposes and accordingly the exemption U/s.

11 shall be allowed to the assessee. The Ld. AR further

submitted that belated submission of Form-10 should not deprive

the assessee of claiming the exemption U/s. 11 of the Act. The

Ld. AR relied on the decision of the Hon’ble Madras High Court in

the case of M/s. Nadigar Sangam Charitable Trust vs. Assistant

Director of Income Tax (Exemptions) [2019] 263 taxman 0648

(Madras).

Per contra, the Ld. DR submitted that as per the provisions

of section 11(2) of the Act, the assessee shall file Form-10 on or

before the due date of filing of the return of income as mentioned

in section 139(1) of the Act. Since the assessee failed to furnish

7 Form-10 along with the return of income for claiming exemption

U/s. 11(2) of the Act, exemption shall not be allowed to the

assessee. The Ld. DR relied on the decision of the Hon’ble Kerala

High Court in the case of CIT vs. Shree P. Subramoniam

Religious Trust [2009] 179 Taxman 144 (Kerala). The Ld. DR

pleaded that the order of the Ld. Revenue Authorities be upheld.

available on record and the orders of the Authorities below. We

find from the order of the Ld. AO that the assessee has claimed

exemption U/s. 11 of the Act while filing ITR-7 claiming it as

capital account. However, the Ld. AO observed that the amount

is shown under the heading “sundry debtors” but no capital

expenditure was incurred as stated by the assessee. Admitted

facts are that the assessee has also not filed Form-10 to claim

accumulation U/s. 11(2) of the Act while filing the return of

income U/s. 139(1) of the Act. We also note that the assessee

has not filed condonation of delay petition before the Ld. CIT as

per the Circular No. 7 of 2018, dated 20/12/2018. It is an

admitted fact that the assessee has incurred certain advances to

various suppliers as detailed below:

8 Sl Name of the person Purpose No of credit (Rs.) 1. Bhargavi General Stores 91,100 2. N. Ways Financial Services 1,00,000 3. P. Lokesh Raju 82,174 4. Social Service Centre, Vijayawada 3,000 5. Sri Lakshmi Fal Ash Bricks, S 1,21,600 Kota 6. Sri Sai Chaitanya General Stores 5,800 7. Surya enterprises S. Kota 18,03,640 Total 22,07,314

expenditure incurred during the impugned assessment year and

considered as advances since the invoices for the supply of

materials have been received in the subsequent financial year.

The invoices are also accounted in the AY 2017-18 only. The

assessee has also failed to upload Form-10 within the due date

prescribed U/s. 11(2) r.w.s 139(1) of the Act. The Ld. AR also

failed to demonstrate before us whether the same expenses have

been claimed in the AY 2017-18 also. No documentary evidences

are produced before us for non-claiming of the same expenditure

in the AY 2017-18. In the case law relied on by the Ld. AR in the

case of M/s. Nadigar Sangam Charitable Trust vs. ADIT

(Exemptions) (supra) the Hon’ble Madras High Court observed

that the assessee in that case has filed the necessary Forms as

9 prescribed U/s. 11(2) of the Act and hence it cannot be pleaded in the instant case. The Hon’ble High Court of Kerala in the case of CIT vs. Shree P. Subramoniam Religious Trust (supra) has laid down that merely an advance cannot be treated as the actual application of funds that this advance would be utilized for the purchase of cement later. In view of the above discussions, we are of the considered view that since the assessee has neither expended the money during the relevant assessment year nor filed Form-10 within the due date prescribed U/s. 139(1) of the Act, the exemption claimed by the assessee is not valid in law and hence the grounds raised by the assessee are dismissed.

Pronounced in the open Court on the 9th September, 2022.

Sd/- Sd/- (दु�वू�आर.एलरे�डी) (एसबालाकृ�णन) (DUVVURU RL REDDY) (S.BALAKRISHNAN) �या�यकसद�य/JUDICIAL MEMBER लेखासद�य/ACCOUNTANT MEMBER

Dated : 09.09.2022 OKK - SPS

10 आदेशक���त�ल�पअ�े�षत/Copy of the order forwarded to:- �नधा�रती/ The Assessee–Association of Relief Volunteers, No.48-87- 1. 27, ESI Hospital Road, Gunadala, Vijayawada. राज�व/The Revenue – Income Tax Officer (Exemptions), Aayakar 2. Bhavan, Veerabhadrapuram, Rajahmundry. 3. (i) The Chief Commissioner of Income Tax, Vijayawada. (ii) The Commissioner of Income Tax (Exemptions), Hyderabad. आयकरआयु�त (अपील)/ The Commissioner of Income Tax (Appeals), 4. Vijayawada. �वभागीय��त�न�ध, आयकरअपील�यअ�धकरण, �वशाखापटणम/ 5. DR,ITAT, Visakhapatnam गाड�फ़ाईल / Guard file 6. आदेशानुसार / BY ORDER

Sr. Private Secretary ITAT, Visakhapatnam